Please look at the actual numbers below for the 2024 Medicare program. They come from the Trustees Report issued last June (2025). Pepole wring their hands about the cost of Medicare but never have a grip on the actual numbers. It is one the great probelms in our society that most people have opinions without supporting data.
The Medicare numbers are big. The actual retirees getting the benefits, however, have paid a big part of the costs when they were workers and continuw to pay a big part of the costs as retirees.
The Income Flow of Medicare for 2024
Medicare Part A benefits (hospital costs) are primarily paid for from
- Medicare payroll taxes paid by workers and their employers
- income tax that retirees pay for the income from their Social Security benefits
- interest from investemnts
- premiuims from voluntary participants
Note: Medicare payroll taxes are deducted from workers pay checks except for people like the Treasury Secretary who reclassify large parts of their income as not subject to Medicare tax. In his case that is roughly $300,000 per year that he doesn't have to pay.
Medicare Part B benefits (doctors' costs) are paid for by
- premiums (Part B) paid by retirees and disabled beneficaries - 25%
- contributions from the federal government - 75%
- interest from investemnts
Medicare Part D (drug costs) are paid for by
- premiums from Social Security benefits and premiums paid to drug plans by retirees (12.9%)
- contributions from the federal government (74.7%)
- contributions from the States (12.3%)
- interest from investemnts
The three tables below reflect the income statements for the three components (Parts A, B, D) of the Medicare program for calendar 2024 based on the
2025 ANNUAL REPORT OF THE BOARDS OF TRUSTEES
OF THE FEDERAL HOSPITAL INSURANCE AND
FEDERAL SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS.
Dated June 18, 2025
Medicare Part A - Income Statement
Opening Asset Balance : $208.797 billion
Revenue
- Payroll Taxes : $396.450 billion
- Income Taxes on OASDOI benefits : $39.794 billion
- Interest on Investemnets : $7.196 billion
- Primiums on from voluntary participants : $4.759 billion
- Other : $!.6 billion
- Fraud and Abuse Control Receipts: $1.1 billion
Total revenues : $451.155 billion
Expenditures
- Net Benefits : $416.288 billion
- Admin Expenses : $3.3 billion
- Fraud and Abuse Control Expenses : $2.8 billion
Total expenditures: $422.456 billion
Net addition to the trust fund : -$28.699 billion
Total assets of the Part B account in the trust fund, end of period : $$237.496 billion
Medicare Part B - Income Statement
Opening Asset Balance : $172.210 billion
Revenue
- Part B Premiums from
- enrollees aged 65 and over : $125.427 billion
- disabled enrollees under age 65 : $14.410 billion
- Medicare Advantage participants : $0.308 billion
- Government contributions: $385.980 billion
- Interest on investments : $3.542 billion
- Interfund interest receipts and payments : -$0.004 billion
- Annual fees—branded Rx manufacturers and importers : $2.789 billion
- ACA Medicare shared savings program receipts : $0.440 billion
Total revenue : $532.891 billion
Expenditures:
- Net Part B benefit payments : $547.849 billion
- Total administrative expenses : $5.588 billion
Total expenditures : $553.437 billion
Net addition to the trust fund : -$20.546 billion
Total assets of the Part B account in the trust fund, end of period : $$151.664 billion
Medicare Part D - Income Statement
Open Balance of assets of the Part D account in the trust fund, beginning of period : $15.688 billion
Revenue
-
Premiums from enrollees:
- deducted from Social Security benefits : $5.801 billions
- paid directly to plans by retirees : 13.475 billions
- Government contributions:
- Prescription drug benefits : $111.155 billion
- Prescription drug administrative expenses : $0.404 billion
- Payments from States : $17.995 billion
- Interest on investments : $0.265 billion
- DOJ/OIG/MA settlements : $0.166 billion
Total revenue : $149.262 billion
Expenditures
- Part D benefit payments : $145.680 billion
- Part D administrative expenses : $0.488 billion
Net addition to the trust fund : $3.095 billion
Closing balance of the Part D account in the trust fund : $18,782 billion
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Notes from the Trustees Report
1. Financial Operations in Calendar Year 2024 - Part A
On July 30, 1965, the Social Security Act established the Federal Hospital Insurance Trust Fund as a separate account in the U.S. Treasury. All the HI financial operations occur within this fund.
Table III.B1 presents a statement of the revenue and expenditures of the fund in calendar year 2024, and of its assets at the beginning and end of the calendar year. The total assets of the trust fund amounted to $208.8 billion on December 31, 2023. During calendar year 2024, total revenue amounted to $451.2 billion, and total expenditures were $422.5 billion. Total assets thus increased by $28.7 billion during the year to $237.5 billion on December 31, 2024.
a. Revenues
The trust fund’s primary source of income consists of amounts appropriated to it, under permanent authority, on the basis of taxes paid by workers, their employers, and individuals with self-employment earnings, in work covered by HI. Included in HI are workers covered under the OASDI program, those covered under the Railroad Retirement program, and certain Federal, State, and local employees not otherwise covered under the OASDI program.
HI taxes are payable without limit on a covered individual’s total wages and self-employment earnings. For calendar years prior to 1994, taxes were computed on a person’s annual earnings up to a specified maximum annual amount called the maximum tax base. Table III.B2 presents the maximum tax bases for 1966–1993. Legislation enacted in 1993 removed the limit on taxable income beginning in calendar year 1994.
Table III.B2 also shows the HI tax rates applicable in each of calendar years 1966 and later. For 2026 and thereafter, the tax rates shown are the rates scheduled in current law. As indicated in the footnote to the table, in 2013 and later employees and self-employed individuals pay an additional HI tax of 0.9 percent on their earnings above certain thresholds.
Total HI payroll tax income in calendar year 2024 amounted to $396.4 billion—an increase of 8.0 percent over the amount of $367.2 billion for the preceding 12-month period. This increase occurred primarily because both the number of covered workers and average wages were higher.
Up to 85 percent of an individual’s or couple’s OASDI benefits may be subject to Federal income taxation if their income exceeds certain thresholds. The income tax revenue attributable to the first 50 percent of OASDI benefits is allocated to the OASI and DI trust funds. The revenue associated with the amount between 50 and 85 percent of benefits is allocated to the HI trust fund. Income from the taxation of OASDI benefits amounted to $39.8 billion in calendar year 2024.
Another substantial source of trust fund income is interest credited from investments in government securities held by the fund. In calendar year 2024, the fund received $7.2 billion in such interest.
A description of the trust fund’s investment procedures appears later in this section.
Section 1818 of the Social Security Act provides that certain persons not otherwise eligible for HI protection may obtain coverage by enrolling in HI and paying a monthly premium. In 2024, premiums collected from such voluntary participants (or paid on their behalf by Medicaid) amounted to about $4.8 billion.
The Railroad Retirement Act provides for a system of coordination and financial interchange between the Railroad Retirement program and the HI trust fund. This financial interchange requires a transfer that would place the HI trust fund in the same position in which it would have been if the Social Security Act had always covered railroad employment. In accordance with these provisions, a transfer of $645 million in principal and about $14 million in interest from the Railroad Retirement program’s Social Security Equivalent Benefit Account to the HI trust fund balanced the two systems as of September 30, 2023. The trust fund received this transfer, together with interest to the date of transfer totaling about $12 million, in June 2024.
Legislation in 1982 added transitional entitlement for those Federal employees who retire before having had a chance to earn sufficient quarters of Medicare-qualified Federal employment. The general fund of the Treasury provides reimbursement for the costs of this coverage, including administrative expenses. In calendar year 2024, such reimbursement amounted to $44 million for estimated benefit payments for these beneficiaries.
Legislation in 1996 established a health care fraud and abuse control account within the HI trust fund. Monies derived from the fraud and abuse control program are transferred from the general fund of the Treasury to the HI trust fund. During calendar year 2024, the trust fund received about $1,221 million from this program.
b. Expenditures
The HI trust fund pays expenditures for HI benefit payments and administrative expenses. All HI administrative expenses incurred by the Department of Health and Human Services, the Social Security Administration, the Department of the Treasury (including the Internal Revenue Service), and the Department of Justice in administering HI are charged to the trust fund. Such administrative duties include payment of benefits, the collection of taxes, fraud and abuse control activities, and experiments and demonstration projects designed to determine various methods of increasing efficiency and economy in providing health care services, while maintaining the quality of such services, under HI and SMI.
In addition, Congress has authorized expenditures from the trust funds for construction, rental and lease, or purchase contracts of office buildings and related facilities for use in connection with the administration of HI. Although trust fund expenditures include these costs, the statement of trust fund assets presented in this report does not carry the net worth of facilities and other fixed capital assets because the proceeds of sales of such assets revert to the General Services Administration. Since the value of fixed capital assets does not represent funds available for benefit or administrative expenditures, the Trustees do not consider it in assessing the actuarial status of the funds.
Of the $422.5 billion in total HI expenditures, $416.3 billion represented net benefits paid from the trust fund for health services.42 Net benefit payments increased 4.7 percent in calendar year 2024 over the corresponding amount of $397.5 billion paid during the preceding calendar year. These payments reflect the change in the number of beneficiaries, the price of health services, and the volume and intensity of services. Further information on HI benefits by type of service is available in section IV.A.
The remaining $6.2 billion in expenditures was for net HI administrative expenses, after adjustments to the preliminary allocation of administrative costs among the Social Security and Medicare trust funds and the general fund of the Treasury. The expenditure amount of $6.2 billion also included $2.9 billion for the health care fraud and abuse control program.
1. Financial Operations in Calendar Year 2024 - Part B
Table III.C1 presents a statement of the revenue and expenditures of the Part B account of the SMI trust fund in calendar year 2024, and of its assets at the beginning and end of the year.
The total assets of the account amounted to $172.2 billion on December 31, 2023. During calendar year 2024, total revenue amounted to $532.9 billion, and total expenditures were $553.4 billion. Total assets were $151.7 billion as of December 31, 2024. The asset level decreased during 2024 by approximately $20.5 billion.
a. Revenues
The major sources of revenue for the Part B account are (i) contributions of the Federal Government that the law authorizes to be appropriated and transferred from the general fund of the Treasury and (ii) premiums paid by (or on behalf of) eligible persons who voluntarily enroll. Of the total Part B revenue in calendar year 2024, $139.8 billion represented premium payments by (or on behalf of) enrollees—an increase of 6.6 percent over the amount of $131.2 billion for the preceding year.
Government contributions matched the premiums paid for fiscal years 1967 through 1973 dollar for dollar. Beginning July 1973, disabled persons who are under age 65 and who have met certain other conditions became eligible to enroll in Medicare, and the calculation of the premium-matching government contributions was changed. The amount of government contributions corresponding to premiums paid is determined by applying a matching rate to the amount of premiums received.51 By law, a matching rate is determined for each of two groups of Part B enrollees—one for those aged 65 and older and one for the disabled. The matching rate is equal to twice the monthly actuarial rate applicable to the particular group of enrollees, minus the standard monthly premium rate, divided by the standard monthly premium rate.
51For 2016 through 2025, under the intermediate assumptions, the standard premium includes an additional amount ($3.00 through 2024 and $0.90 in 2025) to repay the balance due resulting from general fund transfers in 2016 and 2021 to the Part B account of the SMI trust fund, in accordance with the Bipartisan Budget Act of 2015 and the Continuing Appropriations Act, 2021 and Other Extensions Act. This additional amount is not included in the determination of the matching rates and is not to be matched by government contributions.
b. Expenditures
The account pays expenditures for Part B benefit payments and administrative expenses. All expenses incurred by the Department of Health and Human Services, the Social Security Administration, and the Department of the Treasury in administering Part B are charged to the account. Such administrative duties include payment of benefits, fraud and abuse control activities, and experiments and demonstration projects designed to determine various methods of increasing efficiency and economy in providing health care services while maintaining the quality of these services.
In addition, Congress has authorized expenditures from the trust funds for construction, rental and lease, or purchase contracts of office buildings and related facilities for use in connection with the administration of Part B. The account expenditures include such costs. The net worth of facilities and other fixed capital assets, however, does not appear in the statement of Part B assets presented in this report, since the value of fixed capital assets does not represent funds available for benefit or administrative expenditures and is not, therefore, pertinent in assessing the actuarial status of the funds.
Of total Part B expenditures, $547.8 billion represented net benefits paid from the account for health services.53 Net benefits increased 10.1 percent compared with the corresponding amount of $497.4 billion paid during the preceding calendar year. The change in net benefits paid reflects the net change in both the number of beneficiaries and the price, volume, and intensity of services. Additional information on Part B benefits by type of service is available in section IV.B1.
The remaining $5.6 billion of expenditures was for administrative expenses and represented 1.0 percent of total Part B expenditures in 2024. Administrative expenses are shown on a net basis, after adjustments to the preliminary allocation of such costs among the Social Security and Medicare trust funds and the general fund of the Treasury.
1. Financial Operations in Calendar Year 2024 - Part D
The total assets of the account amounted to approximately $15.7 billion on December 31, 2023. During calendar year 2024, total Part D expenditures were approximately $146.2 billion. Government contributions were provided on an as-needed basis to cover the portion of expenditures that Medicare subsidies support. Total Part D receipts were $149.3 billion. As a result, total assets in the Part D account increased to $18.8 billion as of December 31, 2024. Table III.D1 presents a statement of the revenue and expenditures of the Part D account of the SMI trust fund in calendar year 2024, and of its assets at the beginning and end of the calendar year.
a. Revenues
The major sources of revenue for the Part D account are contributions of the Federal Government authorized to be apportioned and transferred from the general fund of the Treasury, premiums paid by eligible persons who voluntarily enroll, and payments from States.
Of the total Part D revenue in 2024, $5.8 billion represented premium amounts withheld from Social Security benefits or other Federal benefit payments. Total premium payments, including those paid directly to Part D plans, amounted to an estimated $19.3 billion or 12.9 percent of total revenue.
In calendar year 2024, contributions received from the general fund of the Treasury amounted to $111.6 billion, which accounted for 74.7 percent of total revenue. The payments from States were $18.0 billion.
Another source of Part D revenue is interest received on investments held by the Part D account. Because this account holds a very low amount of assets, and only for brief periods of time, the interest on the investments of the account in calendar year 2024 was $0.3 billion. Finally, law enforcement and other settlements were negligible.
b. Expenditures
Part D expenditures include both the costs of prescription drug benefits provided by Part D plans to enrollees and Medicare payments to retiree drug subsidy (RDS) plans on behalf of beneficiaries who obtain their primary drug coverage through such plans. Unlike Parts A and B of Medicare, the Part D account in the SMI trust fund does not directly support all Part D expenditures. In particular, enrollee premiums that are paid directly to Part D plans, and thus do not flow through the Part D account, finance a portion of these expenditures. However, these premium amounts are included in the Part D account operations (both income and expenditures) presented in this report. Total expenditures are characterized as either benefits (representing the gross cost of enrollees’ prescription drug coverage plus RDS amounts) or Federal administrative expenses.
All expenses incurred by the Department of Health and Human Services, the Social Security Administration (SSA), and the Department of the Treasury in administering Part D are charged to the account. These administrative duties include making payments to Part D plans, fraud and abuse control activities, and experiments and demonstration projects designed to improve the quality, efficiency, and economy of health care services.
In addition, Congress has authorized expenditures from the trust funds for construction, rental and lease, or purchase contracts of office buildings and related facilities for use in connection with the administration of Part D. The account expenditures include such costs. However, the statement of Part D assets presented in this report does not carry the net worth of facilities and other fixed capital assets because the value of fixed capital assets does not represent funds available for benefit or administrative expenditures and is not, therefore, pertinent in assessing the actuarial status of the funds.
Of the $146.2 billion in total Part D expenditures in 2024, $145.7 billion represented benefits, as defined above, and the remaining $0.5 billion reflected Federal administrative expenses. The Medicare direct premium subsidy payments and enrollee premiums implicitly cover administrative expenses incurred by Part D plans. The total assets of the Part D account as of December 31, 2024, were higher than in 2023 primarily because of the increased advanced payments to Part D plans required in 2025 as a result of the benefit redesign under the Inflation Reduction Act of 2022.
